Developers keeping Old City a hot spot!

by:Al Heavens<br />Inquirer Columnist<br /><br />What’s all this I hear about a real estate slowdown? It doesn’t seem to be affecting Old City, at least as far as the developers are concerned.<br /><br />Walk up and down the streets of Philadelphia’s oldest neighborhood and you’ll see a lot for sale, and a lot of construction and rehabbing going on.<br /><br />And just about every day the last couple of weeks, my phone has rung or e-mail has arrived with some public-relations person announcing that so-and-so is planning to build such-and-such on Arch, Front, Second, Third, Fourth, Market, Chestnut, south or north or east or west.<br /><br />Then I tell them that I don’t write about individual projects, and when I do write a trends piece – especially in this somewhat unaccommodating real estate climate (euphemistically speaking, of course) – I need to see at least 50 percent reservations and four stories of steel in the ground, and at least that many reservations for rehabs.<br /><br />And then they ask me out to lunch, but I rarely go. If I accepted every invitation, I would weigh 800 pounds.<br /><br />I can see why Old City remains so hot. I could kick myself for not buying the whole neighborhood in 1980, when Carl Dranoff and Steve Solms were having to package groups of investors so they could rehab warehouses into Historic Landmarks for Living.<br /><br />Old City has parallel neighborhoods in other older cities – the bottom of Beacon Hill in Boston, around Mass General on the Charles River; the Prairie District in Chicago along Lake Michigan; Anacostia in Washington; Brooklyn, N.Y.<br /><br />Since warehouse conversions to rentals began in the late 1970s, Old City has become a mecca for young single and newly married professionals, with a smattering of hip empty-nesters (the suburbanites who always let their now-grown kids call them by their first names).<br /><br />It would seem, then, that the kinds of living spaces that would attract such buyers would be small, easy-to-maintain units with prices falling into what Peter Engel, PR man for the rehabbed Ellington condos at 1500 Chestnut St. (of 160 units, 79 have been purchased, four reserved), calls the “sweet spot” for today’s sales – $350,000 to $500,000.<br /><br />I checked out a 456-square-foot, fifth-floor condo in the first block of North Front Street, which is undergoing a cosmetic rehab after 20 years as a rental.<br /><br />When completed, the condo will likely sell for $600 a square foot to a young single who is willing to pay $250,000 for equity to move up from. A place with a kitchen designed for someone likely to bring home takeout after a hard day or dine at one of the 20 restaurants within a quick walk of the secure front door.<br /><br />Even sweeter, you see, than Engel’s “sweet spot” uptown.<br /><br />I’ve been experimenting with a fever chart for city neighborhoods developed by Trulia Real Estate Search of San Francisco. Though on the chart Old City is not broken out of the 19106 zip code it shares with Society Hill, the median sales price for March to May was $329,500, only slightly lower than it was in the same period of 2005.<br /><br />That’s not saying that places won’t sell for $1 million or more in Old City, because a few have. That’s just saying that given the choice of renting a 456-square-foot loft for $1,100 a month and paying a little more for a chunk of equity, it makes sense in a buyer’s market to buy – especially since interest rates continue to drop and there are always strategies short of nontraditional mortgages to finance things.<br /><br />Personally, I couldn’t breathe in a 456-square-foot condo, but I’m coming from the other end of the market. It’s something to trade up from.<br /><br />And though flippers have virtually disappeared from the real estate market, there’s nothing wrong with looking for a long-term investment property in one of these neighborhoods – one to four units, you live in one, rent three – or in a small condo conversion.<br /><br />There are three ways for investors to buy in this market, according to Allan Domb, the condo king: buy, hold and rent; buy, renovate and resell; or buy new construction with the intention of keeping and renting it.<br /><br />Or you can simply buy and occupy. There’s plenty on the market. Monte Helm of says his most recent survey of agents and brokers nationwide indicates that only 51 percent of all listings are getting anything close to the asking price.<br /><br />Bad news for sellers, but good for buyers.<br /><br /><br />——————————————————————————–<br />”On the House” appears Sundays in the Inquirer. Contact Alan J. Heavens at 215-854-2472 or

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